In the previous post, I described how the Tax and Penalty Minimization (TPM) method can greatly reduce your Required Minimum Distributions (RMDs) and thus your total lifetime tax bill – resulting in significantly higher final total assets.

But as I wrote that post, one question kept popping into my head: instead of striving for a $0 tax bill until age 72 (as is the default in the TPM method), could it be worth it to pull more from your pre-tax accounts (beyond the standard deduction) and thus pay a small amount of taxes earlier in your retirement to further reduce your pre-tax account balance and thus reduce RMDs and taxes after age 72 (soon 75)?

Let’s find out. 

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In previous posts, I outlined an early retirement withdrawal method called the Tax and Penalty Minimization method, and I discussed Required Minimum Distributions (RMDs) that can begin at age 72 (and soon 75 it looks like) and can result in significant taxable income and thus taxes.

In this post, we’re going to show just how much better the TPM method is than the traditional withdrawal method for reducing RMDs and thus your tax bill. Especially if you’re an early retiree and can take advantage of decades of good tax planning.

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If you’re focused on FIRE (Financial Independence and Retiring Early), it’s easy to sweep topics like Required Minimum Distributions (RMDs) under the rug. Those don’t start until age 72! That’s decades from now!

But an early retiree is in a unique position to take advantage of decades of tax planning – which means we can hopefully minimize taxes over our ENTIRE LIFE, including the span when we’re forced to take RMDs.

But before we dive into how to minimize lifetime taxes that includes RMDs for an early retiree, we need a good understanding of what they are and how they work.

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